The payment-to-income ratio (PTI – Payment To Income) is the ratio between the monthly mortgage payment and the borrowers' disposable income.
The rules
- The Bank of Israel prohibits banks from approving a mortgage when the ratio is above 50%.
- When the ratio is above 40%, the bank must set aside more capital against the loan, so most banks avoid it or price it expensively.
What counts as "income"?
Usually the net monthly income of all borrowers, according to pay slips or reports. Banks may treat bonuses, overtime, rental income or allowances differently, and sometimes count only part of them.
And existing loans?
Loans, leasing and fixed liabilities reduce disposable income in the bank's eyes. So closing a small loan before applying can increase the approved mortgage amount. Loan consolidation
How much is really right?
Being allowed to reach 40% does not mean it is wise. A ratio of about 30%–35% leaves room for ongoing expenses, savings and changes. A family with young children or unstable income needs an even larger margin.
To calculate: how much mortgage can I get (in Hebrew). More: how the bank calculates your mortgage.